Stocks inch higher despite cliff anxiety

The stock market ended higher Thursday after flipping between small gains and losses throughout the morning. Uncertainty about the “fiscal cliff,” just days away, was top of mind for many traders.

The Dow fell as much as 36 points before ending the day higher, rising 59.75 points to close at 13,311.72. Other indexes followed similar patterns. The Standard & Poor's 500 rose 7.88 to 1,443.69. The Nasdaq rose 6.02 to 3,050.39.

The S& P 500 has gained 15 percent this year, its largest annual rally since 2009. The benchmark measure has risen 1.9 percent this month.

If the Republicans and Democrats don't work out a compromise before the end of the month, the U.S. could go over the “fiscal cliff,” a reference to big tax increases and government spending cuts that would automatically kick in if no budget deal is in place. Some economists fear that would push the U.S. back into recession.

But even a successful compromise is no guarantee that the market will soar. The market already assumes that a budget compromise will be reached, some analysts have said, evidenced by its more-or-less steady increase since mid-November.

A compromise “doesn't make everything better,” said Tim Biggam, market strategist with the brokerage TradingBlock in Chicago. “It just stops things from getting worse.”

Herbalife shares fell sharply for the second day on hedge fund manager William Ackman's allegations that the nutritional supplements company is a pyramid scheme.

The founder and CEO of Pershing Square Capital Management L.P. said Wednesday that he has been shorting the company's stock for several months. Short sellers make money when a stock declines. Ackman detailed his allegations in a presentation Thursday at the Sohn Conference Foundation meeting in New York and confirmed that he has an “enormous” short position.

Herbalife's shares fell nearly 10 percent to close at $33.70 Thursday. It was one of the biggest decliners in the New York Stock Exchange for the day. This follows a 12 percent drop Wednesday.

Darden Restaurants, the parent of Olive Garden and Red Lobster, fell $1.34 to $45.47 after the company reported sharply lower profits.

Rite Aid, the drugstore chain, soared 16 percent, rising 17 cents to $1.21, after the company reported its first quarterly profit since 2007. The pharmacies filled more prescriptions, and an influx of generic drugs helped profitability.

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